Forex Assets

Why Are Digitized Gold and Silver Perfect for Diversification?

Today, people have more and more investment options, from classics like gold and silver to recent innovations like Bitcoin and other cryptocurrencies. But there is one type of asset that has stood the test of time: precious metals. Here’s why what may seem like an old-school outdated product is still very interesting from the point of view of a young digital native investor.

A Brief History of Gold and Silver

The civilization of the Incas referred to silver and gold as “sun sweat” and “moon tears”. In ancient Greek mythology, gold represented the glory of the immortals. And even historical figures like Sir Isaac Newton believed in the long-discredited pseudo-science of “alchemy,” which aimed to turn basic metals into gold. The history of gold as money dates back to around 550 B.C. and government-issued fiat coins, such as the US dollar, used to be directly linked to gold in a monetary system known as the gold standard. And let’s not forget the statues of the Academy Awards, the World Cup trophy, or the medals for first place in the Olympics. All bright, beautiful, solid gold.

In January 2019 the purchase of gold by central banks reached its peak of the last 50 years, mainly because countries like Russia are changing their reserves from US dollar to gold. At the present time, the world consumption of newly produced gold is around 50% in jewelry, 40% in investments, and 10% in the industry. With 440 tons per year, China is the world’s largest gold-producing country. In January 2019 the purchase of gold by central banks reached its peak of the last 50 years, mainly because countries like Russia are changing their reserves from US dollar to gold.

Silver, on the other hand, remains the second most popular precious metal just behind gold. It is also used for jewelry, as an investment asset, and as an industrial resource. Many investors appreciate silver as an investment, as it tends to be more volatile than gold due to its lower trading volume.

Inflation-Proof Investment and Portfolio Diversification

Analysts have long argued that gold acts as a hedge against inflation and protects investors against market volatility and unpredictability. A general rule is to have 5-10% gold exposure in the portfolio.

For younger investors with higher risk tolerance and higher return expectations, gold might look like a conservative investment. But it can complement and enhance an investor’s overall portfolio by balancing technology-oriented assets with a time-tested commodity.

Gold is both a creator of wealth and a keeper of wealth. As young investors, you have to keep your eyes on the finish line, probably several decades in the future. Since people now live and work longer, long-term investment strategies that include stabilizing asset classes are crucial.

Why Digitize Gold and silver?

Possessing physical gold and silver has always been desirable for many. There is something tangible about it. Its physical quality means that you can see it, feel it, weigh it and admire its beauty. From a golden calf, a golden fleece and gold crowns to streets paved with gold, this metal has constituted a fundamental element of our collective human history and its images have filtered even into our language (for example, “as good as gold”, “worth its weight in gold”, etc.). In a word, gold is timeless.

There are companies that offer the best of both worlds: Purchases and possess digitized physical gold or silver. But you can exchange it with the same convenience and user experience you’re used to with other digital assets.

But possessing physical gold or silver has its disadvantages. You need to visit a gold trader or at least order physical coins or gold bullion at your store. Then you have to take care of security on your own and keep it at home. In case someone comes in and steals it, you need proper insurance and also a special safe to cover it. An alternative is to keep it in a safe deposit box at the bank or on a gold trader, which means you have to move there and pay relatively high commissions for it.

Forex Assets

What is the Best Trading Position? Part V – How to Choose Properly What Assets to Trade

So far, our lessons were quite technical, involving a lot of numbers and calculations. Today, however, we wish to show you how your own participation and involvement can grant you the best trading position. The examples will be based on the forex market, but the rationale of the story transcends to all markets we trade.

What are the consequences of trading widely popular currencies?

Most traders will tell you to trade the EUR/USD, USD/JPY/, and GBP/USD. Unfortunately, most people will rarely explain to you how the USD is heavily controlled by the big banks due to its popularity. What this further means is that the market can become pretty volatile and the prices can move suddenly without any logical explanation. Some other currency pairs, such as the NZD/CHF one, may escape the big banks’ attention, which is mainly triggered by a massive influx of orders. In addition, currencies such as the USD are highly susceptible to news events, leaving room for the big banks to manipulate the price in any direction they need to ensure their liquidity. That is why you should be very careful about choosing what you are going to trade in your market of choice and strive to earn as much as you can about potential dangers.

What are the best currencies to trade?

While you can trade any combinations involving the eight major currencies (avoid the USD whenever possible), you should still aim to make more profitable and stable choices. For example, trading the CAD/JPY is better than trading the EUR/USD, but the CAD and the JPY both are affected by USD news to a degree, which means that you can find other options that will prove to be better. It is your job to understand how the currencies you wish to trade work.

The EUR is a great currency to trade because it does not move much when the news on the USD comes out. Moreover, all the news concerning the EUR mainly related to the Eurozone, mitigating its overall impact. The only time traders should pay attention is when the ECB releases news, which still happens rarely and can thus be easily avoided.

The GBP, interestingly, does not correlate with any other currency, which makes it move more often than others do. Like the EUR, the news concerning this currency is easy to notice and avoid.

The CHF appears not to react even to the news it is directly related to. It may, however, react to a lesser degree to the news concerning the EUR. Furthermore, the CHF is one of the easiest currencies to manage because there is almost no erratic movement.

What are the best currency pairs to trade?

The EUR/GBP is one of the most traded currency pairs, but also one of the rare ones that does not involve the USD. Interestingly enough, this pair only accounts for 2% of the market share, which is extremely suitable for avoiding the big banks’ radar. It also gives low ATR, making it one of the least volatile pairs to trade. The EUR/GBP moves slowly, which allows you to set the stop loss and take-profit levels without the two being hit in one day. However, there is no stagnation or choppiness, making it much easier to control in comparison to other currency combinations. Also, the pair isn’t triggered by the US news and, even though both are European currencies, they do not correlate often, so you should not see either of the two gaining strength as the other one is growing weak. 

The GBP/CHF was once the inverse of the EUR/GBP, which thankfully changed after the EUR/CHF crash of 2015. The EUR and the CHF now correlate increasingly less, which allows traders to trade them both without needing to choose between the two. There are many advantages to trading this pair, including the fact that it moves much faster and trends more than the EUR/GBP.

The AUD/NZD is a perfect choice for all traders who tend to avoid volatile markets and heavy news. Both of the currencies that constitute the pair avoid the USD, which immediately takes all the unnecessary drama away. Another important fact is that the AUD and the NZD are both risk-on currencies, which is really important. Currency pairs such as the AUD/JPY, for example, are risk-on/risk-off, which makes it dependent on the stock market. Luckily, the AUD/NZD pair behaves similarly and they do not correlate much.

Additionally, any important news typically comes out early in the trading day, which is ideal for people who trade just before the close of the daily candle. In case of some unfavorable news, this gives these traders almost one whole day to see if the price will correct itself. Most commonly, the price goes back to where it was the previous day, so the news does not need to affect these trades negatively. Because of this pair’s specifics, you can either avoid it in the testing phase or use it as the control currency to see if your system functions at all.

As you can see, just by gathering information on these currencies, their histories, and trading specifics, you can discover how some common facts you read online are not necessarily true. That being said, you must find a way to experience whatever you read in a safe environment (i.e. demo account) and save yourself the pain from making the wrong choices. Whichever market(s) you opt for, make sure that your information collection strategy and research skills are at their best since this is something that will help you build your unique position.

As promised, we are giving you the results of the last problem where you were tasked with applying the scaling out strategy:

Based on the chart, we can see that the ATR is 34.86, which we will round up to 35. Owing to this information, we can calculate our stop-loss and take-profit point (52.5 ≈ 52). If we are dealing with a 50,000 account, our risk equals 1,000, so the pip value is 19.2 in this case. We will make two half trades (9.6 each). After the price hits the take-profit level, we will move the stop loss to the break-even point (the amount you invested in the currency pair in the first place).

We are getting closer and closer to the end of this series, so make sure you follow our next article and complete the story on the best trading position!

Forex Assets

Which Currencies Should I Be Trading With? The Secret to Asset Selection…

One of the most common mistakes made by some Forex traders is not to understand that, correctly deciding with which pairs to make trades, and in which direction, is 90% of the battle to make profits. Unfortunately, many traders focus on trying to perfect the entry methods, not realizing that if you pick correctly what you’re going to upload today, for example, then the exact input method used will not cause a noticeable difference in your trading results. You can become an expert in selecting entries in the 5-minute chart, but if you do not choose with which to trade with a broader perspective, and in the longer term, will be of little use to you. Why do some traders frequently make this mistake, and how can they choose the currency pair with each day in a smarter way?

Why Traders Do Not Consider Pair Selection Carefully

Most traders are eager to start making a lot of money. The way to make a lot of money quickly, as they are told, is trading with shorter deadlines – this is true, at least in theory. Traders realize that some currency pairs have lower spreads (such as EUR/USD) and think they should choose those low spread pairs to make trades and save costs. Another very common reasoning is that it makes sense to trade with currency pairs that are most active during the trader’s preferred trading hours. An additional argument says that each currency pair has its own “personality” and one must gain a lot of trading experience with few pairs to get to know their personalities, and thus make trades more successful.

These considerations are rational and true, at least to some extent. The problem is that they are far from being the most important consideration that should influence the choice of currency pairs for trades. I learned this a few years ago when I decided I would do full-time trades focusing on the EUR/USD and GBP/USD pairs. For several months, these two pairs barely moved, while USD/JPY took off like a rocket and provided easy money to anyone who made trades with it. Of course, I knew very well the personalities of EUR/USD and GBP/USD, I had a great strategy that had worked very well in these pairs for years, and their busiest hours fit precisely in the time zone of my geographical location. Despite all this, my linear thinking made me miss the only real trading opportunities of 2012, which came in pairs and crosses of JPY.

Factor #1 – To Decide Which Pair(s) To Make Trades With

So how should one decide with which currency pair or pairs to trade? I’m going to use an analogy with the gaming world to simplify the subject: Let’s say you go to a casino to play a game where you need other players to risk money at the table to give you the chance to make a profit, I mean, your profits will come from your losses. This is a good comparison with the Forex market, which works the same way. So, which table would you go to? The busiest, with more players and more money at the table, or a quiet one on The corner with just a couple of players? Normally, it would make more sense to choose the table with more players. So why trade in foreign exchange be different? What you want is to be doing trades with the “busiest” currencies at any given time, you want to be where the stock is. Is there any way to determine that? Well, you could try reading the financial news to spot the biggest things that are happening on the market at any time. There is a place for that, but there are easier ways that can tell you where to start focusing your search.

Although Forex trading does not have reliable centralized volume data, there are reliable statistics that tell us that currencies participate in more trades, that is, that currencies are exchanged in larger volumes. Most importantly, today, about 70% of all Forex trades are made between the US dollar, the euro, and the Japanese yen. The pound sterling and the Australian dollar represent a further 10 percent. The US dollar is by far the most dominant of all these currencies, so it is quite reasonable to focus on each of the other currencies against the US dollar. You don’t need to open the trading platform and worry about 80 pairs and crosses or wonder if the Canadian dollar/ Swiss franc is what you should include in your trades today. It’s almost certainly not, and if you ever hear someone telling you about a level of support or resistance in a couple of currencies like that, it’s good to ignore that person – no one is looking at that pair or their levels!

Reducing the Options

Now that you know it’s only worth looking at a few currency pairs, you’ll find it much easier to know which ones participate in trades any day. The method to be used to answer this question is to answer which of these currency pairs is likely to have the highest volatility? It needs volatility, because if the price doesn’t move, how is it going to make money? It is almost mandatory to buy and sell at the biggest price differences you can find, to receive the highest possible profits. There are some ways to predict where market volatility is likely to be, and if you apply the methods I describe below, you should get some good answers.

The first thing we need to find out is that by statistic, in the markets, volatility is “clustered”. Suppose that the average daily range of a currency pair is a movement of 1% of its value, taken over several days. Suddenly, one day it moves 3% of its value. Volatility clustering research conducted by data scientists like Benoit Mandelbrot tells us that this pair is likely to move by just over 1% tomorrow, most likely actually by about 3%. Therefore, when a currency pair is seen to move for more than its average volatility, that high volatility is more likely to continue to be reversed in the short term. Another method we can use is to calculate the average real range (ATR) of the last 5 or 10 days for GBP/USD, EUR/USD, and USD/JPY and to calculate these values as percentages of the price of each pair from the beginning of the period. Whoever has the greatest value, is probably the pair on which it makes sense to focus tomorrow.

Another crucial factor is the trend, or impulse (they are essentially the same thing). Major currencies, such as the US dollar, the euro, and the Japanese yen, have shown in recent years a greater likelihood of moving in the direction of their long-term trends. A good rule of thumb in trading major currency pairs is to ask is What is the lowest or highest price than 3 and 6 months ago? and make trades in most or in full in the same direction as any long-term movement, if any.

If you trade only in the course of Asian trading hours, you are likely to find that your best chances will involve Asian currencies such as the Japanese yen and the Australian dollar. It is advisable to consider whether one can develop a method to do trades on longer time horizons, as otherwise, one could be missing out on other opportunities while asleep, just as I missed out on opportunities in USD/JPY in 2012. If I had the wisdom to trade with the daily graphics at that time, I could have taken advantage of that great move in the Yen very easily, even at night while I was asleep, with the traders in Tokyo doing the heavy lifting for me!

Finally, if you look at an economic calendar to see when major central bank announcements or the most important economic data for major currencies are scheduled, you can see that if you are in a trade before those releases, They could give you the volatility that is necessary to transform your trade into a big winner, or at least show you where volatility is most likely to appear.

Therefore, it is good to limit one’s approach to major pairs and to make trades with currencies that show the greatest volatility, and see where are the greatest trends in the long run. This will give you the optimal opportunities to be profitable in Forex trading.

Beginners Forex Education Forex Assets

Which Currency Pairs Are Most Volatile?

One of the most prominent and most important decisions that you need to make at the start of your career is which currency pair you are going to b trading, there isn’t a right or wrong choice to make here. It will be down to your own preference, and will also need to take into account what your trading strategy is as well as your risk management plans.

One of the things that you should be thinking about when you select which currency pair is the amount of volatility within that pair. The forex markets are incredibly liquid with a lot of money going through them which normally means that there is a lower level of volatility. However, there are many reasons as to why certain currency pairs will have a lot more volatility within them than others.

The volatility of the currency pair that you decide to trade with will affect pretty much every aspect of your trading, the more volatile pairs can mean a lot bigger profits, but the other side of the coin is of course that there are opportunities for much greater losses too, as a result of this you are going to need to balance the potential gains against the potential risks. So we are going to be looking at some of the slightly more volatile currency pairs today, these pairs can offer fantastic opportunities but should be traded with caution, some are quite popular, others are a little rarer and not even found on the majority of brokers.

Just before we get into which the most volatile currency pairs are, it is important that we have a basic understanding of both what a currency pair is and what volatility is. So if we start with currency pairs, each pair is made up of two different currencies, the base currency, and the quote currency. The value of the currency pair is determined by how much of the quote currency make up a single unit of the base currency. So if we were to be looking at the GBPUSD pair, the base currency would be GMO and the quote currency would be USED due to it coming second. So you will then need to work out the price of both the base currency and the quote currency in order to work out whether that air is worth trading.

Volatility is something that is spoken about quite a lot when it comes to trading and forex, volatility is basically the amount of distance that the price fluctuates. The higher the volatility on a currency pair the more the price will move up and down, with a less volatile pair like the EURUSD moving less with each tick (movement). Price movements are of course measured in pips and so the higher the volatility, the higher each pip value and movement.

So let’s take a look at what some of the more volatile currency pairs are that you can trade…

USD / KRW: This pair is made up of the US Dollar and the South Korean Won, it has a highly inflated exchange rate which can make price fluctuations for this pair very common. Some traders seem to think that this currency pair is quite easy to trade and so more and more people are beginning to trade it, this does however mean that the volatility will only increase making it even more dangerous.

USD / BRL: The Brazilian Real falls into what is known as an exotic currency, this means that it is coming from an emerging market. These sorts of currencies often have much higher volatility so pairs such as this one with an exotic currency in it are often far more volatile.

AUD / JPY: The Australian Dollar and Japanese Yen is another very volatile pair, this is known as a commodity currency and these sorts of currencies can be very volatile. Yet the Japanese Yes is one of the least volatile currencies available on the market and people look for it to bring stability to their portfolio. The opposites of these two currencies give the currency pairing a high level of volatility making it very profitable for people looking to profit on price fluctuations.

NZD / JPY: This currency pair works very similarly to the USD JPY pair that we mentioned above with a very similar relationship between the two currencies. Once again the NZD is a commodity currency, its value is mainly tied to the exports of dairy products, honey, wood, and meat. A change in price for some of these products will cause a jump in volatility for this pair.

GBP / EUR: Ten years ago this currency pair would be on this list. However, due to the ongoing Brexit negotiations starting in 2016 this pair has become a lot more volatile, as have many of the pairs now containing the Great British Pound. Each and every news event regarding Brexit shakes up the volatility of this pair with rather large jumps and trends being caused by the news.

CAD / JPY: The Canadian Dollar is heavily dependent on oil prices, this currency pair has a similar relationship to that of AUDJPY and NZDJPY, the inverse in these currency types can cause a lot of volatility. With changes in the price of oil being quite common, it is not uncommon to see jumps in the price of the CAD and so added volatility for this currency pair. If you are thinking of trading this pair, then be sure that you are also monitoring the prices of oil.

GBP / AUD: The GBP USD pair was once again quite a stable currency pair in the past, but there has been a lot of conflict between the US and China in relation to their trade war which has disrupted the trade links between Australia and China, something that Australia really relied on and still does. Due to this, the Australian exports have dropped in value which has, in turn, made the relationship with the GBP a little more volatile.

USD / ZAR: South Africa is one of the world’s primary exporters of gold, and when selling gold around the world it is generally priced in USD. Due to this, the price of gold is highly linked to the strength of the US dollar, and so as the price of gold increases, it will mean that you will need more Arin in order to purchase USD, thus increasing the volatility of the markets.

USD / TRY: There has been a lot of political instability and disruption within Turkey which has caused the Turkish Lira to be incredibly volatile within the forex markets. During moments of political importance such as elections or coups, the volatility of this pair will spike dramatically.

USD / MXN: The relationship between the US and Mexico has been a little wobbly ever since Donald Trump was elected as the president of the US which has caused a lot of volatility within this currency pair. Even more recently, there have been some added tariffs on Mexican exports which have caused an even greater level of volatility within this currency pair.

So those are some of the most volatile pairs to trade, there can be a lot of profits in trading these pairs. However, there can also be a lot of danger, as the potential profits group, so do the potential losses, so these sorts of pairs are best left to those that have studied them or are considered to be experienced traders. Having said that, feel free to experience them on a demo account to get a feel for what it is like trading a volatile pair, you never know, it may be what is right for you.


Forex Assets

Which Are the Most Popular and Profitable Currency Pairs to Trade?

When it comes to forex trading there are a lot of pairs available to trade, a lot of them from the majors, the minors, and the exotic pairs. Some are, however, far more popular amongst traders than others. The world of Forex is attracting more and more people as time goes on, yet many of them do not know what the most popular pairs are or what the most profitable pairs are, they simply choose a random one and then start trading. So that is why we are going to be looking at what some of the most popular and most profitable forex currency pairs to trade are.

Before we do that though, let’s take a look at what a currency pair actually is. The forex market is the global market for trading currencies, it’s also the most liquid financial market in the world. Forex trading is simply the process of buying one currency while at the same time selling another, this is also the reason why the currencies are trading in pairs, one being bought and the other being sold.

There is a base currency and a quote currency, the base currency is the one that is quoted first while the quote currency is the currency symbol that is stated second. So if we were to trade the GBP/USD pair, then the GPB will be the base currency while the USD will be the quote currency. When trading there is also something known as a spread, this is the rate that you can sell a pair at and the rate at which you can buy it, the difference between these two figures is known as the spread. The final thing to point out is how they are displayed, if the GBP/USD pair is set at 1.31, this simply means that every single pound will be worth $1.31.

You also need to understand that there are different types of currency pairs, we very briefly mentioned them as the majors, minors, and exotic pairs. The defining features of the major currency pairs are that they include the US Dollar in them, examples of these major pairs include EUR/USD and USD/CHF. So this would mean that the currency pairs that do not include the USD are not majors, instead, they are known as minor pairs or crosses. They do however contain one of the world’s leading currencies such as NZD/JPY, GBP/AUD, and EUR/CAD. The final set of pairs are the exotic pairs, these often come from emerging economies around the world. They are often the least traded pairs but also some of the most volatile, some of these currencies include the Thai Baht, the Polish Zloty, and the Emirati Dirham.

So what are the most popular trading pairs available?

EUR / USD: The EUR/USD pair is the most well known and also the most popular pair to trade, it consists of the Euro as the base pair and the US Dollar as the quoted pair. It is also the most liquid currency pair available and also one of the most stable, yet it is still incredibly profitable to trade on, the spreads of this pair are also often the lowest of all the currency pairs.

USD / JPY: Another one of the most traded currency pairs traded on the markets and is also known for having its low spreads. The JPY is seen as a safe haven when the markets are in a time of uncertainty.

GBP / USD: The GBP and the USD are both among the most popular currencies and so this currency pair is also one of the most popular and profitable for traders to trade. This pair is normally quite stable, however with recent world events such as Brexit, the volatility has increased, but it remains incredibly popular to trade.

USD / CAD: There is a strong commodities link between the United States and Canada, this currency pair also has a strong link. This pair is known as the Loonie and as the Canadian dollar is linked to the export and prices of oil and grain, these commodities can influence this currency pair.

AUD / USD: The Australian dollar relies heavily on the export of the country’s gold pricing, due to this the AUD/USD currency pair can be influenced by the price of gold. This is yet another very popular trading pair.

USD / CHF: Yet another very profitable pair, the swiss franc is another currency that is seen as a safe haven, due to this the volatility is generally a little lower, yet this currency pair is still incredibly popular.

NZD / USD: The NZD/USD currency pair is another popular one, New Zealand has a strong agricultural influence around the world and so this pair relies heavily on the agricultural output and is an incredibly popular pair to trade.

EUR / GBP: This is again one of the most popular currency pairs to trade around the world due to both currencies being very popular. The Euro is used in many countries around the world making it popular to trade, normally quite a stable pair, this pair has been rocked with increased volatility due to the ongoing uncertainty around Brexit.

USD / HKD: Yet another popular trading pair, in fact, it is ranked as the 11th most traded pair, it can be seen as highly profitable with a lot of potential for smaller moves.

USD / KRW: South Korea has had some very impressive economic growth in local times. It is now the fourth-largest economy in Asia, due to this it now makes up to 2% of all trades that are made in the forex markets, due to its emerging and improving economy, this pair is becoming more and more popular as time goes on.

So those are some of the most popular trading pairs, yet you can’t really do anything with that information if you do not know how to actually trade them, having an understanding of the profitable pairs as well as how to trade them is how you can become a profitable trader. If we take the EUR/USD pair as an example, this pair often allows for a much safer trading experience due to its lower volatility, all that you really need to have when trading this pair is a basic understanding of how the markets work and some basic technical analysis know-how, this pair also often has the lowest spreads available of all currency pairs.

There is, however, absolutely no reason to limit your trading to a single pair, there are in fact over 250 different recognised countries and territories, so there is a lot to choose from when it comes to currency trading. Regardless of whether you chose to trade the majors, minors, or exotic pairs, it is important that you get your forex education done, at least the start of it, get some knowledge for analysing the markets and trade on a demo account to ensure that you are able to successfully trade before putting any real money into the account.

So those are some of the most popular pairs and also a little on what currency pairs actually are. Whichever pair you decide to choose, good luck, but if you are looking for stability combined with the potential for good profits, then go for the ones listed above, others can offer a lot more potential profits, but also a lot more risks.

Forex Assets

The Untold Story on VXX Trading That You Must Read or Be Left Out

For years we have had many interesting products which have allowed us to operate all kinds of volatility assets, even if they were comparatively young products. Understanding these products well has always required a little study time. On the other hand, improper management of these products could lead to increased risk, so traders should know exactly what they are doing.

So, think and test your strategies beforehand and fake everything you can into a demo account before using real money. The VXX, which we will analyze in this section, is by far the most volatile product with nearly $1 billion of assets under management. It is presented as a structured fund (TNC) and has a total expenditure of 0.89% per year.

The VXX can be marketed as a share and is also the underlying of a number of options. The product has existed since 2009 and since then has generated one of the most impressive charts among any of the financial instruments. As we noted, it is obvious that this product should not be considered in any way as a long-term investment, but as a bargaining and hedging instrument.

The decisive factor is that the VXX is not directly related to VIX, but to VIX futures. In previous articles, we have already presented in detail the fact that the movements of these instruments may deviate from each other in some cases. The configuration of the loss limit also depends on account size and personal risk, as well as money management.

Long or Short?

Given the obvious downward trend, the question arises as to why someone wants to go long for a long time. Additionally, it wouldn’t be more affordable for you to cut short a lot of times? The objective of long positions is to benefit from strong increases in volatility, which can multiply the value of the VXX in a very short time.

Since such increases in stock market volatility are accompanied by crashing, we will have effective coverage against price losses. However, this type of coverage becomes quite costly over time, as sufficiently strong volatility increases occur more rarely and the VXX slowly but steadily loses value the rest of the time.

The objective of short positions is the opposite: If there is not a sharp increase in volatility, the VXX decreases in value slowly but steadily, so we accumulate profits if we have a short position.

The problem is this: While the losses are theoretically unlimited in an increase in volatility, as the price can go up to very high, the gains are always below 100%. In addition, the exposure decreases with the fall in prices, so, in absolute terms, we will have less and less profit. Similarly, in the case of making a profit, new short positions would have to be taken in order to keep the initial risk constant. And we haven’t even said that it can be difficult to find a broker who can easily allow us to take short positions in the VXX. Strong increases in volatility can multiply the value of VXX in a very short time.

  • Where do the losses come from?
  • Could the VXX cause large losses?

To do this you must first take a closer look at its construction. The VXX is composed of a combination of VIX futures contracts in different periods, before and after, whose units depend on the maturity of the contracts. This composition changes

daily at the expiration of a small part of the previous month and purchase contracts for the following month. In particular, a separate index is constructed for this purpose (symbol: SPVXSTR), which is mapped to the VXX. It is very important to warn that these changes are made on the basis of a neutral strategic design so that the VXX does not lose value because during a contango situation – in which the lowest value futures are sold and the highest value futures are bought.

The real cause of the long-term price decline is the so-called contango loss. Which describes the predominant deviation of the curve forward to the lowest VIX. Because if these low VIX values persist until the end of the respective front contract, the final settlement will occur at that level. Let’s take an example, consider the following situation of a steep contango:

  • Current VIX: 15 %
  • Future of current month VIX: 18 %
  • Future of next month’s VIX: 20 %

If VIX remains at a low level until futures expire, the value will be lost continuously. Assuming that the VIX is maintained at 15 % until its maturity in the current month as well as in the future, then the losses will amount to 17 or 25 %. Although the structure of the container is rarely so pronounced, losses accumulate continuously as long as there is no significant increase in the volatility or reversal of the feed curve. Because contango prevails, the VXX will lose its long-term value. Certainly, everything becomes evident at the time we realize that, since 2012, the VXX has received around $6.5 billion, according to the money flow tool of

At the same time, we could say that a fortune of just under a billion US dollars is invested in the VXX. This means that around $5.5 billion of assets have been lost in the last 6.5 years. Vance Harwood adds another interesting aspect: If the issuer Barclays Capital were not fully covered, but for example only 90%, it would mean that we would get a good additional income of up to $550 million in addition to the management fee during this period.


VXX is a fascinating product with an unmistakable long-term trend. Despite this, and as is obvious, it is surprisingly difficult and very risky to try to make long-term gains with this product. While the long positions will often fight against the weight of the contango, for the short positions, the sword of Damocles hovers before a rapid and sharp increase of volatility and always on the slow gains that otherwise would be quite regular.

Forex Assets

Forex Trader’s Guide to Agricultural Commodities

Agricultural commodities include items that revolve around crops and animals, making them an important source of nourishment for many people and animals in the world. These commodities can also play a role in industrial applications, such as the building of furniture, fabric for clothing, and skin and hair care products.

Many of these items can serve multiple purposes. For example, corn is food, but it is also used as an ingredient in fuel production. Beef can also be consumed, while other companies use other parts from the cow to make products. This sector also employees more than 1.3 billion people, which is nearly 20% of the entire world’s population. Even with the uncertainty of Forex trading, we know that humans will always have a need for agricultural commodities. In this article, we will provide a breakdown of each of the categories of industrial products and the driving forces behind their prices.

Cereal Grains

This category includes grains like oats, wheat, corn, barley, and rough rice. They serve as food sources for humans and animals. Some of these options, like corn, can be used in fuel. If you monitor the spread between one grain and another, it will give you a good idea of the values of one grain against another. Try Googling “What are the grain prices today?”


Canola, cotton, palm oil, and soybeans are all examples of oilseeds because they have high oil content in their seeds. The meal from these crops can also be used in clothing and other industries. These are considered to be one of the most important crops in the world. 

Meat & Dairy

This category revolves around livestock and includes live animals sold for meat, hide, organs, bones, and other parts, or cuts of meat that are meant to be consumed. Dairy products are primarily used for cooking and include staples like milk, butter, whey, and cheese. 

Soft Commodities

Items in this category are farmed and are usually separated from cereal grains, oilseeds, meat, and dairy. Coffee, Cocoa, and Sugar are common examples. 

Miscellaneous Commodities

These commodities include items like lumber, rubber, and wool that don’t really fit into any of the above categories. Of course, these items serve multiple uses in different industries like clothing, building houses, and others. 

You might find yourself wondering whether you should add agricultural commodities to your trading portfolio. First, you should consider that the price of these products is driven by population growth, agricultural productivity, technology, demand for meat in China, and global warming. Population increase will create more of a demand for these items as the population increases to an expected 9 billion people in the next 20 years.

Agricultural productivity is growing in more developed countries, but it is lacking is less developed ones. Technology can help farmers figure out the best times to plant, monitor the weather, test livestock, and perform other useful tasks. China is the largest meat consumer in the world and that demand is also expected to increase with population growth. As for global warming, heatwaves might kill off crops as temperatures increase over time. This would obviously hurt crop production. 

Some other advantages of trading these products are high liquidity, transparent prices, leveraged trading options, and the fact that there are a lot of products to choose from. Of course, these products carry their risks just like any other forex instruments, so traders should be well-educated and prepared before investing in any asset.

Forex Assets

Forex Currency Pairs 101

You have probably heard about most of the available currencies such as the US Dollar, the British pound, and the Euro, the three of these currencies are traded within Forex as well as plenty of others. Each currency in the world has its own ISO code, this is often a three-letter abbreviation of the currency, on the rare occasion, this may be a four-letter abbreviation. The letters given to it are often related to the overall title of the currency, but in some cases such as with the Swiss Franc, it can be completely different as the Swiss Franc has CHF as its ISO.

We have outlined some of the major currencies below, there are of course a lot of other currencies available, however when you are starting out with trading and the foreign exchange markets, then you will most likely be concentrating on these slightly more major pairs.

So those are some of the main currencies, but when we trade in Forex, we are always trading one currency against another, these pairs of currencies are simply called currency pairs. They are the bread and butter and the buying and selling of these currency pairs is how we end up making money. So let’s have a look at what some of the main currency pairs that you should know and should be looking at trading when you are just starting out.

Major Pairs:

Euro Cross Pairs:

Pound Cross Pairs:

Yen Cross Pairs:

Other Cross Pairs:

Each currency has its own value that fluctuates up and down, the value of a US Dollar is $1, it will always be $1. However, $1 is not equal to £1. At the time of writing this £1 was worth almost exactly $1.26. So in the foreign exchange world, it would be written as GBP/USD = 1.26. It is always written as the base currency first, then the quote currency, and then the current exchange rate.

You are able to both buy and sell currencies, so let’s briefly look at what that means, thy can be summed up with a single sentence each:

Buy or Long = When you buy the base currency and sell the quote currency.

Short or Sell = When you sell the base currency and buy the quote currency.

So how do we make money? Let’s say we want to make a profit on this, we would buy into the pair, which means that we would be buying GBP with our USD for the value of 1.26 US Dollars to Great British Pounds. We would then hope that the value of your point would increase, so the exchange rate would move up to 1.27 or 1.28 (of course there are a  lot of extra decimals in there too). If that was to happen, when we sell back, we would have more dollars than we started with, giving us our overall profits.

That is in essence how the currency pairs work. Of course, there are far greater complications when we start looking at pairs that are completely different to our base currency, the good news is that you very rarely have to ever think about that, the broker that you are using will luckily be able to do all of the thinking and calculations for you, so all you need to look for is the fluctuations in the exchange rate between currency pairs. 

Hopefully, that has given you a little understanding of how things work, there’s a  lot to learn when it comes to trading, so it is good to sometimes keep things simple and to not give too much information at once. Take things one step at a time and you will manage to become successful in no time.



Forex Assets

The Fundamentals of the Swiss Franc (CHF)

The Swiss Franc, otherwise known under the code CHF, is the official currency of Switzerland and Liechtenstein as well as legal tender in Italy. Since its creation in 1850, the CHF has historically been marked by Switzerland’s neutral stance in war situations, making people around the world build trust in Swiss banking institutions. People’s tendency and willingness to keep their money in Switzerland appears to stem from the country’s image of being impartial and honorable under all circumstances, making the CHF and Swiss banks unique. For a period spanning across several centuries, Swiss banking institutions exuded the air of safety and fairness. Their firm approach of withholding information from government entities to preserve anonymity long supported the impression that they would leave on others, which unfortunately started to wither in the past few years.

The long-held belief in the credibility of Swiss institutions and their distinctive conduct was undermined directly once the news of sharing information with US and German governments broke out, consequently affecting their safe-haven status in the world of banking. Apart from the changes in Swiss banking systems and the effects they have had on the way they are perceived by others, it is interesting to note how Switzerland is quite a small country. Along with its size, the country’s GDP is thus also rather small, especially compared to some other countries. Despite these facts, the official currency of Switzerland unusually ranks fifth among all major currencies, which is directly proportionate to the quantity of money flowing into the country. The CHF, which is also called frank or swissie, is currently believed to be the most tightly linked to the price of gold among all other currencies. The history of Switzerland and the present state of the currency both point towards uniqueness and distinctiveness in comparison to other currencies and their respective countries to this day.

The Swiss National Bank

The Swiss National Bank, Switzerland’s central bank, was established in 1907. Unlike other central banks in the world, the Swiss National Bank (SNB) is an aktiengesellschaft (AG) that stands for a public limited company. This further implies that the SNB is a for-profit type of institution, thus resembling J.P. Morgan, Credit Suisse, or Deutsche Bank. Despite its uniqueness, the SNB still functions as a regular bank, i.e. it holds deposits, makes loans, etc. Aside from its standard banking-related tasks, the government of Switzerland additionally placed responsibility for the country’s monetary policy on the SNB. The bank is also in charge of Swiss gold reserves, which has fueled conspiracy theories about large, hidden vaults under the city of Bern that supposedly store immense quantities of gold.

The unproven allegations that kept many interested in the pursuit of confirmation and discovery were not confirmed by the bank which further kept the veil of mystery regarding this topic. This massive interest led to a breakthrough approximately 12 years ago when a German journalist managed to get in touch with an individual who worked in one of the vaults. The worker disclosed confidential information concerning the location of the vaults and the amount of gold to a German newspaper, yet the Swiss government refuted all claims. The Swiss National Bank is, however, still believed to hold massive gold deposits as a central bank responsible for the county’s gold reserves.

What is more, since the SNB is a for-profit independent bank, it achieves its aims of making a profit through the Bank Council, with six members appointed by the government and five by the shareholders. Regardless of the bank comprising the minority of the council, it is still tasked with managing the economic policy. The SNB has a dual mandate, consisting of price stability (i.e. regulating inflation) and economic growth. It is also one of the central banks to meet the least frequently to discuss Swiss monetary policy. The monetary changes, which include the LIBOR (Swiss interest rates), are announced only once every quarter as opposed to many other countries. The Swiss National Bank is led by Mr. Thomas J. Jordan, appointed in 2012 as the bank’s Chairman. One of his greatest contributions was the essay he wrote on the possible repercussions of abandoning the official currency in favor of the EUR amidst the changes that were taking place in European countries in the 90s. This paper contained a detailed assessment of the future, involving monetary policy and housing markets collapse, that would come true a decade later. 

Economic Reports

The key economic reports in Switzerland are GDP, employment level, retail sales, CPI and PPI, and consumption indicator. Nevertheless, it appears that overall economic numbers do not impact the CHF substantially unlike some other currencies. 

Most Traded Pairs

The USD/CHF and EUR/CHF are the most liquid crosses, followed by the GBP/CHF and CHF/JPY currency pairs. Professional traders advise caution with all other CHF-based crosses due to the fact that trading outside these four pairs tends to be rather light and illiquid. Currency pairs such as AUD/CHF typically involve many wide spreads and erratic movements and such crosses are quite susceptible to the impact of news events. Therefore, in order to avoid extreme volatility and gain the most volume, the previously mentioned pairs may be the best option for trading in the currency market.

CHF-based Crosses Compared

Key Correlations


Switzerland held to the gold standard for the longest period of time among all other countries, even after most of them abandoned it in the 1970s. The fact that stayed on the gold standard implies that they maintained equal amounts of gold to back up their currency. This lasted until the 90s when they cut the gold reserves by 50%, so each new banknote they printed would be supported by a half of its value in gold reserves. This ratio was further reduced later, but the CHF is still tied to the price of gold. Even though this relationship has weakened over time, the CHF typically rises when gold does and vice versa.



In the midst of the EUR collapse in 2011, with many European countries undergoing major difficulties, no one knew whether a stronger economy could bail them out or whether the ECM could offer any support. Looking for more stability in the crisis, many wealthy individuals decided to move their finances to Switzerland. This subsequently caused the EUR to depreciate and the CHF to appreciate, and the pair suddenly moved from 1.50 to 1.04. The price of Switzerland’s official currency quickly climbed sharply and as they are a large exporting economy with most of their exporting done with Europe, the price of their products steeply increased.

The SNB decided to take action and buy great amounts of currency once EUR/CHF reached the above-mentioned low so as to return the value to 1.20. The pair went up in a matter of a few hours and after 1600 pips turned out to be one of the greatest market moves in the currency market. The close relationship between the two currencies imitates a currency peg, which entails that a currency pegged to another cannot trade freely anymore. Due to this intense resemblance, some professional traders chose to focus on other EUR-based pairs as they generally involve less slippage and tighter spreads. Nowadays, traders are keen on trading USD/CHF and EUR/USD owing to these crosses’ high (95%) negative correlation.


Trading the CHF

The CHF used to be one of the top three most traded currencies, yet due to the correlations with the EUR and gold, it has lost its independence in a way. Its safety status diminished greatly after Switzerland abandoned the gold standard and the banking institutions started to give out confidential information. Switzerland has maintained its interest rate at -0.75 since 2015, which is one of the lowest rates among all central banks. Inflation amounted to 0.57% in 2019 and was projected to reach 0.64% in 2020. The last report the SNB issued in June of 2020 highlighted a sharp decline in economic activity and inflation as a result of the COVID-19 pandemic. Although they state that current inflation and growth estimates are challenged by unusually high uncertainty, they are generally assumed to pick up in the following year. Due to the nature of the country’s economy and exportation, the CHF carries hardly any difficulties with a trade deficit.

The country’s overall economic activity depends on GDP, and as the decline in Swiss GDP was already noticeable in the first quarter of the year, with April witnessing one of the lowest points in economic activity, the SNB projects a stronger GDP declined in the second quarter of this year. With regard to news events, the CHF’s correlation with the EUR makes it more susceptible to whatever is happening with the EUR. Therefore, if the ECB decided to reduce interest rates, the effects would likely be felt with the CHF as well. The SNB does not necessarily need to take the same action as the ECB, as it has not done in the past either, yet the CHF and the EUR have exhibited similar behavior for many years now. As discussed before, many traders decide to trade other EUR pairs rather than EUR/CHF due to this correlation.

Central Banks’ Interest Rates

Latest Events

The CHF has been moving in various directions lately, which has been largely boosted by the higher EUR. A recent downtrend has turned into a rather weak uptrend supported that can be attributed to the EUR. The EUR appears to have been much better than the CHF lately, pulling it upward. This week, both the EUR and the CHF seem to be in the neutral territory in comparison to other major currencies. Generally, as there is a little divergence between the EUR and the CHF, other crosses involving the former may again be a better choice. The end of August is typically a quiet period in the forex market, so trading currencies can potentially be a little sluggish as well. In terms of economic reports, KOF economic barometer, which many participants in the financial markets seem to be interested in, will come out on August 28, providing information on the Swiss GDP. The CHF is generally directed towards a weaker value due to the Swiss National Bank’s desire to boost inflation.

Although it is one of the strongest currencies in the world, trading the CHF is still subject to susceptibility to some other factors such as the EUR, gold, and, currently, the coronavirus pandemic. Nonetheless, due to its strong economy and the unique central bank the currency rests on, the CHF is believed to remain one of the safer investment options. Switzerland’s safe-haven currency was estimated to be the second best-performing currency of 2020.

Beginners Forex Education Forex Assets

Intrinsic Asset Value Explained

Intrinsic value is a noteworthy term in the forex world as it refers to the measurement of what an asset is worth. Rather than referring to the simple trading market price of the asset, intrinsic value is calculated using more factors, some of which can be difficult to measure accurately. This gives one an overall idea of how a company is performing, along with the underlying value of the company and how much cash is flowing through it. Traders can then determine if the asset is overbought or oversold.

When measuring intrinsic value, there are two types of measurements:

  • Quantitative factors can be measured with hard numbers. This could include financial reports, profits, or any other statistics that can be accurately measured and represented with numbers.
  • Qualitative factors are more interpretive. Traders look at the company’s business model, what sets the business apart, governance, target markets and seasons, the quality of the company’s leaders, and other data that gives one an idea of the company’s qualities and chances of success.

Most traders take both quantitative and qualitative factors into consideration when determining a company’s intrinsic value because both offer important details that give an overall idea of how successful the company is. Many financial analysts have broken this down into effective mathematical models so that these factors can be measured in the most accurate way possible. While this makes the process more accurate, determining a company’s value is still subjective. One trader might find a business model to be solid, while another might feel that it is lacking, for example. These details can lead to differences in opinion. 

There are some popular calculation methods that are used by many traders, including the discounted cash flow (DCF) model, which looks at the company’s free cash flow and the weighted average cost of capital. The WACC accounts for the time value of money before then discounts future cash flow to the present. This system predicts the rate of return and future revenue streams for a company. 

The goal of measuring the intrinsic value for a company is to decide if an asset is overbought or oversold. Investors then make decisions about whether to buy or sell, depending on whether the stock is expected to rise in price or decline.  

Judging the intrinsic value of a company is subjective, but many traders have broken the process down to mathematical calculations that give good results. Most traders look at factors that can be measured with hard numbers, like financial reports, along with more interpretive data about a company’s target audience and other factors. Current events can also affect the intrinsic value of a company. For example, if a product launch fails or a major name in a company is arrested, the price is likely to fall. If you often invest in stocks, it is important to be aware of intrinsic value and how it can affect prices. Those that don’t want to keep up with this themselves should know that many successful financial investors publish their own intrinsic value calculations online for their followers.

Beginners Forex Education Forex Assets

Trader’s Asset Investment Guide: Apple

Apple is an American technology company that is headquartered in California. The company was founded by Steve Jobs and his partner Ronald Wayne back in April of 1976. This recognizable brand is insanely popular thanks to the easily recognizable iPhone smartphone, iPad tablets, Mac computers, iPad music devices, the Apple Watch, AppleTV, HomePod speaker, and AirPods, along with other products and online features. In addition to producing popular products, Apple is also responsible for creating online software like iTunes, the Safari web browser, and so much more. You’ve likely heard of Steve Jobs before, as he was a famous American businessman. The company’s co-creator Ronald Wayne sold his portion of the company shortly after its original launch in a move that he likely regrets to this day.

One thing is for sure about Apple: people will probably buy their products as long as they’re making them. With the popularity of the iPhone, many people trade in their older phones for the newest version every time one is released, even with costs soaring above $1,000 for a new phone. We’ve never doubted that Apple has built a dedicated fan base that will choose their products over anything else, but this company has experienced some ups and downs with their stocks in the past.

Early in 2019, Apple suffered a crisis where stocks plummeted 10%, sinking to an all-time low for the first time in 52 weeks. Financial media commented on the company’s downfall, and things didn’t seem to be going to well for Apple, even though the company had expected the value of their stock to rise right after Christmastime when many people would have been expected to buy their products for gifts.

Fortunately for Apple, their stocks have risen 43% in the previous 12 months, with record revenues being announced for their previous quarter. This rise in value happens to be occurring during the coronavirus pandemic, despite the uncertainty of these pressing times. Considering that many people are relying on unemployment or suffering delayed work hours, it is reassuring for Apple to see a rise in their stock’s value. This is more reassurance that people truly believe in the company.

Considering Apple’s ups and downs, many investors might wonder whether it is a good company to invest in. Here are some reasons why you should buy Apple stock:
The company is hoarding an almost legendary amount of cash. Apple was holding nearly $193 billion in cash at the end of March 2020 and this money is regularly returned to investors through stock buybacks and dividends.

Apple is expected to continue to grow. Their history proves this – the company’s quarterly revenue is up 16% from one year ago. Apple will continue to produce new devices, like updated iPhones and the company will continue to bring in monthly revenue from its TV services, iTunes, and other online services they have created. We can also expect to see new products released as we move more towards the future. Apple makes money through various sources. If the popularity of one product falls, there are several other products that will help the company to continue making a profit.

Although these factors are positive outlooks on Apple’s stock, there are also some downsides to investing in the company. Some feel that their iPhones may be losing popularity as sales are on the decline. While the iPhone used to be the company’s number #1 product, it only accounts for 50% of their revenue today. This could be contributed to the fact that the company continues to churn out new products and services, providing many more options for clients to spend their money on. Still, the number one earning product might end up taking a backseat to some of these other features. You’ll also want to consider that Apple iPhone has some tough competition with Android, which continues to produce new upgraded phones alongside them.

Another downside is that the popularity of Apple TV could decline. This is because the company offered free service for one year to anyone that purchased one of their TVs. This paid off by attracting a large customer base, but it isn’t yet clear how many of these customers are only watching because it’s free. Many of these users are already paying for other monthly subscription streaming services like Netflix, Hulu, Disney Plus, etc. Apple TV only costs $4.99 a month, but some people might feel that they’re already spending too much on streaming services and/or cable. The service will need to compete with other streaming devices to take their place with some customers.

Apple is easily one of the most recognizable companies in the world. It has attracted investors from all corners of the globe and many people have fallen in love with their products, with no plans to turn to any other companies for their technological needs. This company isn’t going anywhere anytime soon, which gives the value of their shares alone.

A few of the main reasons why you might want to invest in Apple would be their continuously advancing products, news updates, and the fact that they gain revenue from various sources like sales and subscription services. Revenue is constantly flooding in for the company and this pays off for investors. As time goes on, the company is expected to grow and bring in even more money. We don’t see Apple going out of business or slowing down anytime in the near future.

On the downside, Apple’s previous reliance on its famous iPhone is declining. Product sales are down, and the iPhone is only responsible for 50% of the company’s revenue. AppleTV also might not perform as well one many of the free yearly subscriptions run out if users decide not to pay for the service. It isn’t clear whether these users will choose to start paying for the streaming service, considering that there are so many competitors out there, like Netflix, Amazon Prime, Hulu, Disney Plus, and so on.

Final Thoughts

As of right now, investing in Apple might not be the best idea. If you had invested back in 2019 when the stock’s value dropped, then you would have made a good investment. Now, the best thing to do may be to wait to see if the value drops and then to invest. While we expect to see growth through new products and accessories from the company, some of Apple’s recent updates aren’t entirely original. For example, it almost seems as though the company is copying others by releasing a streaming service of their own. The only real difference is that the price is a few dollars less than the others. Of course, if you buy right now, the stock’s value may rise – as nobody can predict the market 100%. Be sure to stay up to date on Apple’s earnings reports, product launches, streaming service reviews, and other important information before making your own decision about whether to invest.